Options Expiration

All options have a limited useful lifespan and every option contract is defined
by an expiration month. The option expiration date is the date on which an options contract becomes invalid and the right to
exercise it no longer exists.

When do Options Expire?

For all stock options listed in the United States, the expiration date falls on the third Friday of the expiration month (except when that Friday is also a holiday, in which case it will be brought forward by one day to Thursday).

Expiration Cycles

Stock options can belong to one of three expiration cycles. In the first cycle,
the JAJO cycle, the expiration months are the first month of each quarter - January,
April, July, October. The second cycle, the FMAN cycle, consists of expiration months Febuary,
May, August and November. The expiration months for the third cycle, the MJSD cycle, are March, June, September and December.

At any given time, a minimum of four different expiration months are available for
every optionable stock. When stock options first started trading in 1973, the only
expiration months available are the months in the expiration cycle assigned to the
particular stock.

Later on, as options trading became more popular, this system was modified to cater to
investors' demand to use options for shorter term hedging. The modified system ensures
that two near-month expiration months will always be available for trading.
The next two
expiration months further out will still depend on the expiration cycle that was
assigned to the stock.

Determining the Expiration Cycle

As there is no set pattern as to which expiration cycle a particular optionable
stock is assigned to, the only way to find out is to deduce from the expiration
months that are currently available for trading. To do that, just look at the third
available expiration month and see which cycle it belongs to. If the third expiration
month happens to be January, then use the fourth expiration month to check.

The reason we need to double check January is because
LEAPS expire in January and if the stock has LEAPS listed for trading, then that
January expiration month is the additional expiration month added for the LEAPS
options.

Expiration Calendar

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